Tough Time Finding Talent For Social Enterprises In Emerging Markets

Anne Field
, ContributorOpinions expressed by Forbes Contributors are their own.

Sure, fledgling social enterprises in developing countries face a tough time raising money. But finding and retaining the right people to staff their ventures is about as difficult--so hard, in fact, it can cripple their ability to expand.

Worse yet, it's perhaps the only top impediment that social enterprises continue to face at every stage of growth. In fact, it eclipses the matter of funding as businesses mature.

Recruitment is a top challenge for social entrepreneurs in developing countries (Photo: RippleWorks)

That's according to The Human Capital Crisis: How Social Enterprises Can Find the Talent to Scale, a new report on the topic by RippleWorks Foundation, with funding from Omidyar Network and analytical support from
McKinsey & Company. "The challenge of hiring and retaining talent is more extreme in the developing world," says Doug Galen, a serial entrepreneur who is CEO of RippleWorks. Researchers interviewed more than 600 heads of for-profit and nonprofit social enterprises.

According to Galen, he decided the research was needed after repeatedly hearing from entrepreneurs and venture capitalists about the challenge and how it was affecting their ability to grow. Organizations reported they couldn't find the right people, compete on salaries or hire fast enough. "There was no base of research with which people could make decisions," he says. "We wanted to find out how to help organizations scale in the short-term and long-term."

RippleWorks works with CEOs of social enterprises that mostly are based in such places as Africa, Indonesia, Mexico and India on the top three challenges facing them over the next 6-to-12 months, then finds people with appropriate expertise to volunteer their time and find ways to address those issues. Example: a veteran customer care executive helped a company selling solar powered lanterns to rural villages in developing countries expand its call center.

Probably the most noteworthy finding from the study relates to the relationship between funding and hiring. That is, getting financed doesn't translate to being able to hire talented people. While 63% of young, unfunded companies believe the inability to tap the talent they need will have high or critical impact on their businesses, the problem only gets worse as they get bigger: 75% of funded, early stage companies say the same thing. "As funding becomes less of a challenge, human capital becomes more of one," says Galen.

Another surprising finding: Sales and go-to-market skills are way more in demand than tech proficiency.

Why does this talent gap exist? According to the report, the reasons include:

The cost. Most entrepreneurs don't have the budget to compete with the pay bigger companies can offer. Nearly 2 out of 3 entrepreneurs listed funding in their top three hiring challenges.

Shortage of local talent. More than 1 in 5 entrepreneurs cited that problem as a top impediment to hiring.

Allure of job security elsewhere. Many potential employees in these markets want jobs in more-established ventures. Working for a multi-national, not a risky startup, is preferred.

Doug Galen (Photo: RippleWorks)

What to do? Galen suggests that companies forget about competing on the basis of salary: There's no way they can keep up. Instead, they should start building a talent pipeline well before they need to hire anyone. To keep employees from leaving once they're there--and avoid having to look for replacements--offering career training and development is also important. (Such recommendations hold true for any small business, but they're particularly relevant for social enterprises located in these areas).

Providing mentors is one way to offer career development, but, according to the report, these efforts thus far have been more successful in less-mature ventures. Satisfaction with the value of mentorship drops from 53% at early-stage companies to below 25% at later-stage enterprises. The implication: "One size does not fit all," says Galen. "What you need in mentors changes as a company scales."